There is nothing super bullish or bearish that jumps out at me it has just been about managing your trades. January Crude got within 50 cents of $100 but failed to clear that hurdle today. As of this post Crude is lower by .65%, trading just above $98/barrel. Bulls remain in control but after a near $25 ascent one would think some sort of correction will happen eventually. We would wait for signs of an interim top as trying to pick a top in recent weeks has been fruitless for our clients. Heating oil held up well today, with the biggest loser being RBOB trading off nearly 3%. We see the consumer being pinched and RBOB to be the weakest link. Natural gas continued its slide, falling almost 4% to new contract lows. We see no end in sight and as we said last week, do not rule out $3.25.
Stocks appear to be heading for a losing day to start the week, giving up 0.50-1%. The 20 day MA supported today, but on a breach of that level expect increased selling. Some clients hold ES puts and are currently under water. A trade closer to 1185 should get these positions in the green. Treasuries remain range bound and the inverse relationship to equities should persists. As we’ve said we like playing the short end of the curve with bearish plays in 2013 Euro-dollars.
Gold and silver will finish lower today about in the middle of today’s trading range. The recent highs appear to be acting as resistance and seem to be capping additional upside. We’ve been calling for a $50 break in gold and $2 break in silver ... is this week the week the market will deliver?
The dollar was higher today for the first time in three sessions with all crosses lower. We expect further downside, thinking the Pound and Yen are the best bearish plays from these levels.
Sugar gave up just over 1% breaking a trend line that has supported for the last six months. Trail stops lower if short as we may see momentum traders add to the bearish sentiment. We would not initiate new positions, though, as we are oversold on the daily chart. OJ prices appear to be headed south, closing down five out of the last six sessions; trade accordingly. Soybeans were slightly higher but further upside should be rejected by the 9 day MA. Corn and wheat continue to be sales as we feel risk/reward corn has the most downside potential. We would still be waiting for a lower long entry in live cattle as we think the path of least resistance remains down. Lean hogs are back above their 9 day MA having advanced almost 3% in as many sessions. We like scaling into February hogs longs, thinking we’ve started the next up leg.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.